The concept seems magical. Draft a short description of your company's finance needs, press the Send button, and see what offers of cash and friendship make their way back to your electronic mailbox.

That's how some small-business owners and entrepreneurs envision the World Wide Web. But as any legitimate lender is quick to tell you, exchanging E-mail messages does not constitute the kind of "relationship" that opens up bank loans or venture capital. What makes the difference, Web or no Web, are the basics: showing management experience, a viable business plan, and a decent set of books. "I'm not going to write a check based on what I see on the Web," says Myles Cane, a New York attorney and angel investor. "When you're dealing with startup or early-stage companies, you have to get much more deeply into it."

That said, there are some ways the Web can help you in your quest for capital.

For starters, the Web is a great place to find out just what prospective lenders are out there. Nearly every bank and commercial lender (though not as many venture-capital firms) maintains a Web site, and with some deft navigation, you can usually find the one contact person to whom you should make your opening pitch. That's important for those who've spent too many afternoons lost in voice-mail bureaucracies. You'll find a handy, comprehensive list of banks at www.qualisteam.com/eng/confusa.html. A compendium of 630 venture-capital firms is available at www.findingmoney.com/body.html, while a smaller, more-detailed list of VC firms resides at www.vfinance.com/ventcap.htm. There is no site that acts as a collecting point for nonbank lenders, though a good place to start is with the top 10 list compiled by Enterprise (see "Big Names in Small-Business Loans").

The Small Business Administration has jumped into online financing with its Angel Capital Electronic Network, or ACE-Net (ace-net.sr.unh.edu). On ACE-Net, accredited investors (those with a net worth of over $1 million) get a look at your company's business pitch. This nationwide exposure will cost you $450 and some hefty fees for your lawyers. The payoffs, though, can be substantial: The service allows for financing requests of $250,000 to $5 million, made in the form of "mini" stock offerings regulated by the Securities & Exchange Commission and individual states.

Begun six months ago, the site has only attracted 25 companies and about 200 private investors. But some recent improvements should boost traffic. For one, companies in search of $1 million or less can now fill out uniform registration papers that will permit sales in 18 states. ACE-Net administrator Terry Bibbens says the SBA is expecting up to add 1,000 companies and 3,000 investors by August. Others in the investing community are more skeptical. "If it's a good deal, it's not going to be on the Web," says Wilson Allen, president of Wind River Capital Co. in Austin, Tex. "If they're worth their salt as far as connections, they'll already be plugged into an [investing] network." Even so, as attitudes about online investing begin to change, this high-visibility site is worth keeping an eye on.

Pay special attention, however, to a number of private "matching" sites that purport to do the magical: find instant cash for capital-seekers. While some offer their listing service gratis, others charge finder's fees of up to $1,000. Either way, entrepreneurs should be very wary of these private offers, particularly because the quality of the listed companies tends to be weak. What's more, real investing angels aren't exactly scouring the Web for these anonymous deals. What matters most to them is word of mouth and credibility. Sites trumpeting "the short cut to the long road" aren't going to cut it.

One online tool that venture capitalists do live by is the database of capital-seekers run by Venture One, a VC research and statistical service in San Francisco (www.ventureone.com/entre/registry/index.html). Admission doesn't come easy, however. To be added, a company almost always has to have received at least one previous round of venture financing. Even then, it might not qualify for the level of serious dealmaking that is Venture One's territory. Still, if you can get on this list, do it.

A wave of new sites will soon allow companies to apply for loans directly online. One of the hopefuls is Net Earnings (www.netearnings.com), which promises in the next few months to offer a standardized digital loan form for such giants as Fleet, Mellon, Chase, and Citicorp. The banks will then be able to make instant online approvals, pending certain verifications, of course.

Here are a few other noteworthy destinations:

• Wit Capital (www.witcapital.com) This much-hyped pioneer of Web investing is still the most innovative Net financing site around. If you can stomach dealing with lawyers, the SEC, and state securities regulators, you might be able to hawk your shares here, too.
• Sample Business Plans (www.bplans.com/sample.htm) This workmanlike site showcases sample business plans for a variety of different companies. As plans are an important part of securing financing, these might lend some needed inspiration.
• Small Business Investment Companies (www.hostlink.com/nasbic/index.html) These government-backed private lenders have doled out some $13 billion in long-term debt and equity capital since 1959. Learn about their investing criteria, and read about the companies that have succeeded under SBIC tutelage.

By Dennis Berman in New York

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TABLE: The "Non" Factor
How to Find the Lender Who Was Meant for You
TABLE: Big Names in Small-Business Loans
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